Getting Started: The Home Buying Perspective
Purchasing a house or an apartment is usually a lot of money that an ordinary employee struggles to be able to save up over a short period. Even though it is conceivable to gather up the requisite amount if you have a lot of time to set it aside, most individuals will not be able to purchase their ideal houses when they are still young due to inflation reasons. Additionally, it can be assumed that home mortgages will also not help you to acquire the amount of money you need to purchase the house of your choice.
One of The Options: Co-Purchasing Of The House Model Shared Ownership With Family Members
So, if you desire to have a house in good condition. Before hitting the age of 30, it would be best to consider co-ownership of the residential unit. With this system, you will be able to purchase assets jointly with one or more of the members of your family. But is it worthwhile? To make a strong choice, understand the reason of why it is best to consider the co-ownership of a residential unit rather than the family model.
Joint Property Ownership: Who Is Eligible To Be A Co Owner?
No limits for irrespective of one’s family member or any other individual, one can be a joint owner of a housing property. The law states that it can be your father, mother, brother, sister, son, daughter, spouse or anyone else. Moreover, if someone doesn’t have an earning, he or she can defend one’s co-ownership. You can shoulder the financial responsibility all alone and still reap the benefits that are associated with joint house property ownership.
Joint Ownership of a House Property: The Perks Of Holding Her Together With Your Close Ones
Yes, aunt or uncle or sister or brother or a close friend, yes you can even share the property with any of your family members, but do you really wish to go through all of the trouble to have another person sign along with you on the co-ownership? Well, the answer is benefits.
1. Enhances the strong chances of loan Approval
One of the major advantages that you can gain from holding a house in joint names is the improved home loan eligibility. The lenders of a housing loan longitudinally view your gross monthly income while deciding how much to lend to you as a maximum. For instance, generally, people having an income of Rs. 80,000 would be given a considerably higher loan amount than those who just earn Rs. 40,000 monthly.
Hence, if you wish to obtain a mortgage with a higher amount, you should do so with a relative who earns a compatible income monthly. Explain to the lender that you wish to use the borrower’s funds to purchase the home together. By this method, the ratio of risk taken by lenders in providing higher loan amount goes down.
2. Leverage the tax benefits
We want to tell you good news in case you share house with one of your relatives. You and the other co owners together can get a benefit of tax up to Rs. 1.5 lakhs on the repayment of the home loan principal amount along with you under the Section 80C of the Income Tax Act of 1961. Both of you also enjoy up to Rs. 2 lakhs relief in respect of deduction of the interest payments of the housing loan under Section 24.
And wait there is more. Both of you and the other co-owner are also eligible to take exemption on the stamp duties and other registration fees provided it does not cross the margin of Rs. 1.5 lakhs.
3. Effortless Property Ownership Changes
At present, there is a trend where many Indians prefer acquiring new flat purchase rather than purchase or constructing a separate house. Out of these facts, real estate and law experts advise that any family members should acquire new apartments with other people as co-owners. Therefore, when one of the joint owners of the apartment passes away due to natural causes or due to some accident, the other owner or owners and the property will be passed over to them without any legal problems. What needs to be done is just a fresh registration of the apartment, including a property lawyer.
4. Paying EMIs Becomes Easier
Joint mortgages significantly boost the loanable amount where purchasing a house is concerned. However, this is not the only benefit. The process of acquiring mortgages with one or more co-owners becomes simpler because everyone shares the burden of the EMIs. You only need to cover a portion of the monthly fee. Co-owners can agree on this ratio as well. As a result, you only need to pay a small portion of the EMI that best fits your needs.
Are There Any Disadvantages of Joint Ownership?
Even though jointly owning a house property has its advantages, it has its shortcomings too. We have elaborated on the two most common disadvantages of property joint ownership below.
1. Slow Walk Through the Paperwork
Multiple joint ownerships in a loan means a long draw out process of applying for the loan and subsequent requirements and so lenders take a better channel to these requirements, they also know better how to approach this. The reason for this delay from lenders is that they have to check that all the co-owner documents are proper and original to prevent any fraud. As a result, the documentation tends to last two to three times longer than normal, which hinders the entire application and approval processes of the loan.
2. Impact on CIBIL Score
All co-owners’ names stand in a home loan agreement and hence all the co-owners are bound to read, understand, and contribute the EMI, which makes this risky as it can lead to severe complications. This is why if one co-owner defaults on their EMI payment, that month’s EMI will default entirely. And this will increase the risk of all the joint owners’ credit history while also lowering their CIBIL score.
Conclusion: Assessing The Advantages and Disadvantages
By now, if you have arrived at this conclusion, you should grasp the benefits and/or the pitfalls of becoming a co-owner of a house property. It allows a higher amount to be borrowed as a home loan, comfortably enables EMIs to be paid, and provides attractive tax relief under sections 80C and 24 of the Income Tax Act, 1961. It enables one to easily assign the full title of all the assets to one of the co-owners.
Nevertheless, there are some downsides to be aware of as well, such as the loan wait period and it may also reduce your overall FICO score. It is important to evaluate the circumstances to fit in before considering purchasing a house or any property with two or more owners.